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Sunday, July 31, 2011

National Small Business Summit 2011

Once again I attended the National Small Business Summit, held in Sydney last week.
The general mood was sombre. Retail is clearly doing it tough, which flows through to other industries. This is due to a variety of factors such as:

The high Australian Dollar

International uncertainty

A weak Australian Government

Large increases in government controlled and influenced charges (Electricity prices have increased by 16% in a year.)

Unlike our government, consumers are preferring to pay off debt and increase savings rather than spend on non-essentials

Natural disasters (regionally)

All this results in squeezed margins, wide scale discounting and, unsurprisingly a big dip in small business confidence.

Here are some of what some of the speakers said at the conference.

Chairman of Council of Small Business of Australia, Geoff Fader made the following observation:
Small Business is the largest employer in Australia. (The mining industry employs just 2% of the workforce.)

Deputy Prime Minister, Wayne Swan, pointed to some of the tax assistance his government has provided small business, such as $5,000 write offs for vehicles and $6,500 write-off’s for other individual assets.

There was a debate between Senator Nick Sherry the Minister for Small Business and Bruce Bilson, Shadow Minister for Small Business. As an initial observation in spite of Labor’s rhetoric on the importance of small business to the economy, the portfolio is still not part of their cabinet, unlike the Coalition’s plan. This has long been a sore point for COSBOA.

There was a debate on the appropriateness of small business being the unpaid administrator of the government’s paid parental scheme. Superannuation was also raised in this context, but the government has said it has set up a free Super Clearing House within Medicare (why Medicare?) that employers can use.

The debate became more heated over unfair dismissal, particularly when the shadow minister pointed out that of 1700 applications, only for 3 applications did the tribunal believe that the business had fully complied with the act resulting in the applications being dismissed. What does that say for the ease of compliance? Later Bruce Bilson gave me an example where one business was forced to reinstate a dismissed employee as, even though there was cause, he was too old to get a job elsewhere. Another case was the forced reinstatement of an employee who refused to follow OHS procedures putting himself and others at risk. The minister thought the system was working as designed.

The NAB EGM of Small and Emerging Business, Cindy Batchelor noted that small business is 20% of total Australian banking system, and said that bankers need to get used to dealing with the ‘softer information’ that comes from them. She also said that their June survey showed a sharp deterioration in business confidence.

Senator Nick Sherry also gave a separate address. He pointed out that Australians are saving more (rather than spending in stores) and this along with the high A$, international uncertainty and online sales is hitting retail hard.

Spruiking the NBN he said that it would make it easier for Australians to set up business that are not dependent on being in expensive commercial real estate. Typical leases contain rent rises of CPI + 1-2% which will be unsustainable in the future. (I think extortionate rents unrelated to the businesses of the tenants has been a much bigger factor in the case of retail. One commentator at the Summit (not the Senator) suggested to me that in the next 10 years we will see malls turn into apartments with restaurants and supermarkets as the main commercial tenants, as the current commercial real estate model crumbles.)

Senator Sherry also made the point that 40% of the capital that the banks use for lending is imported, so we certainly are exposed to international financial markets.

The Business Names Register will be running later this year as states refer their powers to the federal government. This means if you want to register a name nationwide, instead of it costing you about $1000, it will now cost $70.

A business to business national dispute resolution system is likely to be based on the current Victorian model. A summary paper on this will be presented later this year. This will greatly reduce the costs of dealing with disputes in court (typically $15,000).

He finished off by saying the Carbon Tax is coming (whether you like it or not), and small businesses should pass on any cost impacts, if they can! Lovely.

Paul Higgins from Emergent Futures, gave all much food for thought, looking at the current trends. His initial comment is that the future is here already, it is just not everywhere. One key trend is the aggregation of consumers to bypass traditional businesses. He gave examples in the accommodation, car rental and clothing sectors, where suppliers that would otherwise be unknown receive social endorsement.

One particularly jaw dropping example of the future was the boards showing images of shelves of a supermarket at train stations in South Korea. You point and click your mobile at, perhaps, milk, bread and a bottle of wine you need that night while waiting for your train before going home, and it is delivered to your door by the time you get there. What do you think will happen to your local corner store or even supermarket?

His final comment was that, right now, somewhere in a garage is a guy making a bullet with the name of your business on it!

Perhaps my favourite session was with Malcom Farr from the Canberra press gallery who gave a master class on advocacy and getting publicity in the media. I will probably write about this later, but to give you some flavour, he started with the naming COSBOA. He said, most people don’t know what it is (if you don’t, its website is here). He said that it sounded like a tropical disease. As in “I just survived a month in the Amazon jungle, but I am still suffering from a bad dose of COSBOA.” We expect a name change before the next summit!

There was of course, much much more with as much learned between the sessions as in them. Next year it will be in Melbourne.